RNS Number:1710D
Luminar PLC
18 May 2006
Luminar plc
Turnover up 3%
Profit before taxation pre-exceptional items up 11%
Net debt reduced by 30%
Year to 2 Year to 27 Growth / Growth /
March February (Reduction) (Reduction)
2006 2005
#m #m #m %
Turnover 296.1 288.1 8.0 3%
Profit from trading operations 50.8 40.1 10.7 27%
Total PBT pre-exceptional items * 45.6 52.6 (7.0) (13)%
PBT from continuing operations pre-exceptional items 43.0 38.7 4.3 11%
PBT from continuing operations post-exceptional items 22.9 24.5 (1.6) (7)%
EPS from continuing operations pre-exceptional items 43.9p 38.5p 5.4p 14%
EPS from continuing operations post-exceptional items 25.8p 23.9p 1.9p 8%
Net debt 115.0 165.0 (50.0) (30)%
* Total PBT pre-exceptional items has declined #11.3m as a result of a lower
contribution from discontinued operations of #2.6m, (2005 - #13.9m)
Highlights
Return of Capital and Dividend
O Following the de-gearing of the Company over the last two years the
Board has decided to return capital to shareholders through a total of #70m of
buybacks over three years with the majority expected in the first eighteen
months
O The Entertainment division will either be sold or de-merged and any net
cash proceeds will be returned to shareholders in addition to the planned
buybacks
O 10% increase in the level of the proposed final dividend to 10.74p,
giving a dividend for the full year of 15.18p: it is the Board's intention to
introduce a policy of progressively moving to a dividend cover of two times
Results - Financial and Operational
O Sales up 3% - like for like sales excluding non-core operations were
down 1%, with Dancing like for like sales up 3%
O Pre-tax profit on continuing operations pre-exceptional items up #4m to
#43m, (2005 - #39m) - pre-tax profit on continuing operations post-exceptional
items was down #2m to #23m, (2005 - #25m)
O EPS from continuing operations pre-exceptional items up 14% to 43.9p,
(2005 - 38.5p) - EPS from continuing operations post-exceptional items up 8% to
25.8p, (2005 - 23.9p)
O Total exceptional items before taxation of #46m, (2005 - #54m), have
been recognised, primarily relating to a non-cash goodwill impairment of #34m,
(2005 - #5m)
O Total EBITDA before exceptional items is down #12m to #87m, (2005 -
#99m), although EBITDA from continuing operations before exceptional items is up
#2m, (2%), to #83m, (2005 - #81m)
O Strong cash flow from continuing operating activities before exceptional
cash items up 19% to #72m, (2005 - #61m) - cash flow from continuing operating
activities after exceptional cash items up 9% to #66m, (2005 - #61m)
O Net debt reduced by #50m in 12 months to #115m, (2005 - #165m),
following disposal of non-core sites and sale and leasebacks
O Continued development of high quality branded destination night club
businesses with 13 re-branded units during the year, and pipeline of 10 future
branded clubs acquired from the Nightclub Company
O Dancing segment admissions up 5% now serving over 320,000 customers per
week
O Current experience of the smoking ban in Scotland initially positive,
particularly in Dancing units with outside smoking areas
O Relocation of administration and management functions from two sites
onto one site completed, enabling further rationalisation savings to be
accessed, targeted at #4m over the next three years with #2m in the next twelve
months
Outlook 2006/7 - Future Prospects
O Capital expenditure in 2006/7 to be focussed around high quality Dancing
clubs with smoking facilities, with total forecast capital expenditure cut back
to #55m from #65m previously signalled as a result of capital expenditure
efficiency measures - pace of programme to be maintained over the next three
years
O Like for like sales for the first ten weeks are down 8%, held back by
admissions in unbranded units and the Entertainment division. We do not believe
this to be indicative of the full year outlook
Stephen Thomas, Chief Executive, said:
"The Company has continued to make significant progress in its transformation
towards the development of high quality, branded destination dancing clubs.
These clubs continue to perform well.
The market place in which the Company operates is subject to several major
regulatory influences, and current trading is below management expectations. The
Company continues to monitor these impacts closely and will develop and review
the operational and financial plans as appropriate.
The capital efficiency measures together with the tightening of the financial
structure of the Company will ensure that our shareholders benefit from the
actions taken by the Board".
18 May 2006
Enquiries
Luminar plc
Stephen Thomas, Chief Executive Tel: 020 7457 2020 (today)
Nick Beighton, Finance Director Tel: 01908 544100 (thereafter)
College Hill
Matthew Smallwood Tel: 020 7457 2020
Introduction
Luminar plc today presents its results for the year ended 2 March 2006.
The Company has continued to work towards achieving its strategy of developing a
high quality night club business which is mainly branded. By the end of the
year, the Company was operating 43 units trading as part of its Oceana, Liquid
and Lava and Ignite brands, representing 45% of annualised Dancing sales, of
which 13 units were opened during the year to 2 March 2006.
The execution of the strategy is being undertaken in difficult market
conditions, and in the face of significant regulatory change. The Board believes
that the business being developed, based on differentiated destination venues,
will be a strong and successful one, achieving good and stable returns for
shareholders.
Working towards a high quality night club business has resulted in further
consideration of the future of the Entertainment division, and the decision has
been taken to exit the business as soon as reasonably practical, either by sale
or de-merger. We have also realised significant proceeds from non-core assets
during the last two years, having disposed of 79 units which did not fit the
strategy, raising #46m in proceeds.
Progress in Implementing Strategy
During the financial year the Company has made considerable progress in
re-aligning its business, to focus on a portfolio of branded Dancing venues to
lead the late night market.
(a) Re-branding
As a result of focussing the investment capital on re-branding the Dancing
estate, the Company has branded a further 13 units during the year, (2 Oceana, 9
Lava and Ignite and 2 Liquid), bringing the total number of branded units at the
year end to 43 (2005 - 30). The momentum on the re-branding programme will be
sustained over the next three years.
The Company also acquired 10 large capacity clubs from the Nightclub Company
during the year for a consideration of #11m, increasing the licensed capacity of
the Company by 10%. The Company intends to re-brand these sites to its existing
brands of Oceana, Liquid and Lava & Ignite, within the existing capital
expenditure budget, over the next three years.
(b) Withdrawal from non-core operations
During the year the Company completed the disposal of 64 units for #30m cash
proceeds. The disposal of the Enterprise division realised #25m cash
consideration, with a further #1m received post year end. This transaction
comprised 49 of the 64 units initially ring-fenced in November 2003. The Company
has similarly continued to divest of surplus non-core sites, with the disposal
during the year of 15 single sites realising #5m in cash with an additional #5m
recognised within receivables at the balance sheet date in relation to cash
proceeds of #5m relating to these disposals which were received after the year
end.
The Company has continued to focus on disposing of non-core assets, with the
objective of completing the process of rationalisation of the estate during the
next financial year. The Company expects to complete the disposal of a further 5
properties for a total consideration of #4m to be received during the first
half. The Company has unconditionally exchanged on the disposal of its Southsea
complex for consideration of #5m, which will complete in August 2007. A further
5 properties are targeted for disposal in 2006/7 for proceeds of #5m. The
Company is also holding other non-core units, which are currently trading, for
sale at the year end.
(c) Review of the Entertainment Division
Over the previous two years the Company has been operating a "holding" strategy
with the division, withholding significant capital investment until the impact
of Licensing reform is known. The division has nevertheless remained profitable
with significant cash generation.
New management for the division have been appointed, and during the year the
Company has focussed on controlling the cost base and restoring the Chicago Rock
Cafe proposition. To effect this the Company is currently trialling two low-cost
developments at Yeovil and Newbury.
Since the year end, the Company has updated its review of the Entertainment
division. Following this review the Company has concluded that it does not
believe that the Entertainment division forms part of its future strategy of
late night, branded units. During 2006/7 the Company will continue to improve
the operational effectiveness of the division in the short term whilst
finalising plans to realise appropriate value from the division for
shareholders.
(d) Reduction of net debt
The Company has continued to focus on the reduction of the level of debt, and as
a result has completed the sale and leaseback of three properties during the
year, realising a total consideration of #28m. These sale and leasebacks,
together with the disposals outlined above, have contributed to the significant
reduction in net debt during the year, down #50m to #115m, (2005 - #165m).
Future Business Structure
Following implementation of the above strategy, the future composition of the
Company's business is anticipated to be as follows:
Feb 05 Mar 06 * Strategy Future
Units Units Units
Dancing 120 110 Rebrand 70% to core brands 120
(Oceana, Liquid, Lava &
Ignite)
Entertainment 72 79 Review short term operational -
effectiveness to realise
shareholder value, (Chicago
Rock Cafe, Jumpin Jaks)
Non-core 91 41 Realise value from sales of -
non-core assets
283 230 120
* The units presented above represent the total of continuing and discontinued operations: of the
total 230 units, 107 within Dancing, 74 within Entertainment and 9 within Non-Core represent
continuing operations
The future Luminar business will be a high quality, predominantly branded, night
club business, offering a differentiated product that will segment it from other
products in our market place to enable and aid the business through the current
difficult trading environment and period of regulatory change. The future
business will have approximately 70% of Dancing units being branded.
Regulatory Environment
The Company is facing a period of significant challenge from recent regulatory
changes, most importantly the changes to the licensing regime through
implementation of the Licensing Act 2003, from 24 November 2005, and from the
smoking ban to be introduced following the vote in February 2006 to amend the
Health Bill to ban smoking in pubs and private members clubs from the summer of
2007, together with the introduction of the Scottish Executives ban on smoking
introduced from 26 March 2006.
The changes to the licensing regime have intensified the competitive pressure on
the late night market, specifically in the high street sector. As a result the
Company is observing additional competition in the Entertainment division,
although the Company's dancing units, especially the branded units, are
continuing to perform strongly.
The introduction of a no-smoking environment, specifically in the Scottish
units, brings additional challenges to the sector. Current experience of the
impact of the smoking ban in Scotland, albeit in the limited time that the
changes have been introduced, indicates that the Company's performance has been
positive, particularly in our Dancing units with outside smoking areas.
Although it is too early to conclude on the effect of no-smoking legislation on
the business, recent experience of the introduction of similar legislation, (in
Ireland and New York), indicates that any downward pressure on sales is
reversible over the medium term.
The Company will continue to invest in re-branding and all the Dancing units
have the capability for outdoor smoking areas. The existence of outside smoking
areas is key to future performance and our plans are well advanced for
implementation during the next financial year.
Financial Performance
Units Revenue Revenue per unit Profit from operations * Profit from
operations per
unit *
2006 2005 2006 2005 2006 2005 2006 2005
# #m #m #'000 #'000 #m % #m % #'000 #'000
Dancing 107 188.6 171.7 1,763 1,605 54.7 29 54.4 32 511 508
Entertainment 74 99.3 102.3 1,342 1,382 19.3 19 20.4 20 261 276
Non-core trading 9 8.2 14.1 911 1,567 (1.1) (13) (2.2) (16) (122) (244)
Continuing
operations * * 190 296.1 288.1 1,558 1,516 72.9 25 72.6 25 384 382
* Profit from operations is stated before exceptional items
* * Profit from continuing operations is stated before corporate costs
Sales from continuing operations are up #8.0m (3%) to #296.1m, (2005: #288.1m),
including sales of #5.8m, (2005: #nil), relating to the acquired Nightclub
Company units. Sales growth excluding the contribution of the Nightclub Company
units was 1%. Like-for-like sales, excluding non-core operations, were down 1%.
Gross margin, excluding fair value adjustments associated with the acquisition
of the Nightclub Company units, remained stable at 83%, although operating
margin before exceptional items from continued operations is slightly diluted at
17%, (2005: 18%), as a result of a 27% increase in utilities costs together with
the impact of closure periods in units undergoing re-branding. EBITDA before
exceptional items from continuing operations is however up #1.5m (2%) to #82.7m,
(2005: #81.2m), following increases in the level of depreciation to 11% of
continuing sales, (2005: 10%). Total EBITDA before exceptional items is down
#12.1m to #87.1m, (2005: #99.2m).
Profit from trading operations before exceptional items is broadly flat on prior
year, however profit from trading operations after exceptional items is up
#10.7m to #50.8m, (2005 - #40.1m), boosted by profits arising on sale and
leasebacks and the reversal of impairment charges on properties awaiting
re-branding.
Total profit before tax before exceptional items is #45.6m, (2005 - #52.6m),
comprising profit before tax from continuing operations before exceptional items
of #43.0m, (2005 - #38.7m), and profit before tax from discontinued operations
before exceptional items of #2.6m, (2005 - #13.9m).
Profit before tax from continuing operations before exceptional items is up
#4.3m, (11%), to #43.0m, (2005: #38.7m), the increase helped by lower interest
costs as result of lower average net debt levels than in 2005. Earnings per
share from continuing operations before exceptional items is up 14% to 43.9p,
(2005: 38.5p), as a result of a lower effective tax rate on continuing
operations of 25%, (2005: 27%).
Total net exceptional charges before tax of #45.6m, (2005 - #53.5m), were
recognised during the year, primarily relating to impairment of goodwill of
#33.7m (2005 - #4.9m), and net impairment charges of property, plant and
equipment of #12.2m, (2005 - #42.5m).
Profit before tax from continuing operations after exceptional items is down 7%
to #22.9m, (2005: #24.5m), as a result of increased exceptional items relating
to the closure of properties. Earnings per share after exceptional items is up
8% to 25.8p, (2005: 23.9p), following a lower effective tax rate on continuing
operations of 17% (2005: 29%).
Segmental Performance
Dancing Division
Year to Year to Growth
2 March 2006 27 February 2005 *
#m #m %
Turnover 188.6 171.7 10
EBITDA ** 72.6 70.7 3
Operating profit ** 54.7 54.4 1
Number of units at year end 107
* Restated following introduction of IFRS
** Before exceptional items
The Dancing segment has experienced strong sales growth during the period,
although this growth has been coupled with increasing pressure on operating
margins.
Sales were up #16.9m (10%), to #188.6m, (2005: #171.7m), driven by the newly
opened re-branded units. The acquired Nightclub Company units contributed #5.8m
in the year, and total sales growth excluding the Nightclub Company units was
6%. Like-for-like sales were up 3%, which was lower than total segment growth as
recent re-brands and the acquired Nightclub Company units are excluded from the
like-for-like measure.
Operating profit is up #0.3m on prior year levels, with EBITDA up #1.9m to
#72.6m, (2005: #70.7m). However operating margin has declined from 32% by 3 pts
to 29% in the year to 2 March 2006. Operating costs have increased as a result
of the higher utilities costs experienced in the second half, coupled with fixed
costs associated with units closed for re-branding during the period.
Entertainment
Year to Year to Growth
2 March 2006 27 February 2005 *
#m #m %
Turnover 99.3 102.3 (3)
EBITDA ** 27.4 28.8 (5)
Operating profit ** 19.3 20.4 (5)
Number of units at year end 74
* Restated following introduction of IFRS
** Before exceptional items
Sales for the Entertainment segment are down 3% to #99.3m, (2005: #102.3m), with
like-for-like sales down 6%. The decline in sales results predominantly from
Jumpin Jaks units, which have experienced difficult trading conditions during
the year. Additionally, since the changes to the licensing regime, the segment
has experienced strong competition from other high street operators across both
the Chicago Rock Cafe and Jumpin Jaks brands, and consequently the Company
anticipates trading conditions for the segment to remain difficult.
Following the appointment of a new management team during the year good progress
has been made in controlling the cost base. Profitability across the segment has
fallen in line with the difficult trading conditions, despite approximately 50%
of Chicago Rock Cafe units recording increased earnings over the prior year.
Overall the segment's operating profit is down #1.1m to #19.3m, (2005: #20.4m),
with EBITDA down #1.4m to #27.4m, (2005: #28.8m). Decreased earnings have
resulted from a decline in sales levels in Jumpin Jaks units, coupled with
increased utilities costs. Nevertheless, control of variable costs, especially
remuneration costs, has maintained operating margin at 19%, close to the prior
year level, (2005: 20%).
Head Office and Management Costs
Head office and management costs comprise the head office and administrative
functions, area and divisional management costs, central depreciation together
with information technology costs for the group.
During the year the Company initiated the rationalisation of its administration
and back-office functions onto one site in Milton Keynes, with the closure of
the Company's former administration centres in Luton and Preston being completed
since the year end. All costs relating to the Preston property, which has been
marketed since the year end, have been provided for the duration of the lease.
The Luton property has been sold subsequent to the year end.
Costs have increased year on year by #0.6m to #21.4m, (2005 - #20.8m),
predominantly from double running costs relating to the back-office
rationalisation and other one-off costs. During 2006/7 the Company will focus on
the further rationalisation of its head office and management costs following
completion of the relocation of its "back-office" functions to one site, and has
targeted cost reductions of #4m over three years with #2m in the next twelve
months.
Discontinued Operations
Discontinued operations comprise non-core units, which are either held-for-sale
or have been disposed of during the year, which form part of the Company's
programme to exit from non-core operations. Other non-core units yet to be
marketed for sale are presented within continuing operations, for although these
units form part of the Company's strategy to dispose of non-core units, these
units do not meet the criteria to be classified as discontinued operations under
IFRS 5.
The number of units comprising discontinued operations total 120, with 49
relating to the disposed Enterprise division, a further 28 units disposed or
unconditionally exchanged in the current and prior year, with the remaining 43
units relating to other trading or closed non-core operations held-for-sale.
Sales relating to discontinued operations total #42.1m, (2005: #87.0m), with
operating profit before exceptional items of #2.7m, (2005: #14.0m).
Capital Expenditure
Cash outflows relating to capital expenditure, including intangible assets, has
increased to #57.2m (2005: #50.1m), and is analysed between the following
components:
2006 2005
#m #m
New developments 6.5 4.6
Re-branding 17.4 22.5
Refurbishments 7.4 8.7
Replacement capital 20.7 14.3
52.0 50.1
Capital expenditure relating to acquisition of Head Office 5.2 -
Total 57.2 50.1
During the year #5.2m was incurred on the acquisition of the Company's new head
office premises in Milton Keynes, in anticipation of a sale and leaseback of the
property. This sale and leaseback of the freehold interest was completed in
February 2006, realising cash proceeds of #8.6m.
Returns on branded units continue to be strong, generating post-tax returns of
25% and the Company expects a similar level of returns from its planned
re-brands in 2006/7.
Exceptional Items
Continuing Operations
The Company has recognised exceptional items before taxation relating to
continuing operations of #20.1m, (2005 - #14.2m), as outlined below.
Exceptional items recognised within continuing operations have been split
between those items relating to the on-going operations of the Company, and
those items relating to the closure of properties which have arisen primarily as
a result of the Company's re-branding strategy and the resultant exit from
non-core operations and relocation of the head office. This split has been
presented to enhance the visibility of exceptional items relating to the
on-going business of the Company.
2006 2005
#m #m
Exceptional items relating to trading units
Impairment of goodwill (15.7) (2.0)
Impairment of property, plant and equipment (0.3) (9.1)
Reversal of prior years impairment of property, plant and equipment 9.5 -
Profit on sale and leaseback of property, plant and equipment 7.7 -
Costs relating to rationalisation and re-organisation (2.5) -
Other exceptional items 0.6 (0.6)
(0.7) (11.7)
Exceptional items relating to the closure of properties
Impairment of property, plant and equipment (11.2) (2.4)
Impairment of goodwill (3.3) -
Provision for onerous lease commitments (4.9) (0.1)
(19.4) (2.5)
Total exceptional items relating to continuing operations (20.1) (14.2)
(a) Exceptional items relating to trading units
An impairment charge of #15.7m, (2005: #2.0m), has been recognised against the
carrying value of goodwill following the annual impairment test required by IFRS
3, Business Combinations. This impairment has been recognised following the
re-segmentation of the Company's business, which has resulted in additional
goodwill being allocated to the Entertainment and non-core segments that
previously was allocated to the Dancing segment. The goodwill allocated to the
Entertainment segment has been written down by #9.6m and non-core goodwill has
been written-down by #6.1m, as a result of declines in the performance of Jumpin
Jaks and non-core units respectively.
The reversal of the prior year impairment of property, plant and equipment of
#9.5m, (2005 - #nil), has arisen as the trigger causing the original impairment
to be recognised has reversed, i.e., where it is now planned to re-brand a unit.
The impairment of property, plant and equipment of #0.3m, (2005 - #9.1m),
principally reflects the difference between the value in use of cash generating
units, (i.e., discrete trading units), and their carrying amount.
The Company has recognised gains on the sale and leaseback of properties during
the year totalling #7.7m, receiving a cash consideration of #28.0m. Further
exceptional items relate to costs associated with rationalisation and
re-organisation of #2.5m, (2005 - #nil), principally costs associated with the
strategic review of the Entertainment division, together with charges and
releases of provisions for onerous lease commitments, #0.6m credit, (2005 -
#0.6m charge).
(b) Exceptional items relating to the closure of properties
The Company has recognised total exceptional charges before taxation relating to
the closure of properties from within the non-core division and former
administration centres of #19.4m (2005 - #2.5m). These charges primarily relate
to the impairment of property, plant and equipment and goodwill, together with
the recognition of provisions for onerous lease commitments relating to the
closure of these properties.
These charges have been recognised against units which the Company intends to
dispose of in the future, however these units have not been included in
discontinued operations as they do not meet the criteria to be presented as held
for sale operations at the balance sheet date.
Discontinued Operations
The Company has recognised net exceptional charges before taxation of #25.5m,
(2005 - #39.3m), relating to discontinued operations. Net exceptional charges
after taxation are #18.1m, (2005 - #34.5m). These exceptional charges have
arisen from the re-measurement of units held for sale to their fair value less
costs of sale, #24.9m, (2005 - #35.4m) and the recognition and release of
provisions for onerous lease commitments relating to closed properties, #0.8m,
(2005 - #3.1m).
A loss on the disposal of the Enterprise division of #3.0m, (2005 - #nil), and
profits of #3.2m, (2005 - #0.8m loss), in respect of the disposal of single
sites held for sale have been recognised.
Cash Flow
The Company's continuing operations contributed cash flow from operating
activities, pre-exceptional items, of #72.1m, up 19% on 2005. Cash generated
from continuing operations remained strong at #76.1m, before net outflows for
interest and tax of #4.0m following tax refunds received on settlement of prior
year's tax computations of #7.1m. A reconciliation of continuing cash flows to
the amounts included in the consolidated cash flow statement is included in
note 9 (c).
Total cash flow from operating activities is down #7.8m to #70.1m, (2005:
#77.9m). The factors leading to the #7.8m decline in total cash from operating
activities are outlined below:
#m
Cash flow from operating activities for the year to 27 February 2005 78
Discontinued operations (13)
Continuing operations (7)
Financing costs 4
Taxation 14
Cash flow from operating activities for the year to 2 March 2006 - before
exceptional items 76
Outflows relating to exceptional cash items (6)
Cash flow from operating activities for the year to 2 March 2006 70
The Company has decreased its cash outflow on investing activities by #27.8m, as
a result of the net proceeds received on the disposal of the Enterprise division
and other non-core properties, #27.7m, together with the proceeds received on
sale and leasebacks, #28.0m. These inflows of #55.7m offset capital expenditure
of #57.2m, (2005 - #50.1m), and the outflow of #10.9m in respect of the
acquisition of units from the Nightclub Company. Interest income is #1.5m higher
at #2.6m, (2005 - #1.1m), as a result of higher short term cash deposits
following disposals during the year.
Cash flow prior to financing activities is up #20.0m to #60.3m, (2005 - #40.3m).
The Company has utilised #10.3m of this inflow to fund the payment of the
ordinary dividend, and has initially retained #50.0m to reduce net debt in line
with the Company's stated strategy.
Net Debt
The Company continues to be highly cash generative, and has continued to reduce
its net debt through operating cash flow together with the disposal of non-core
assets and sale and leasebacks. Net debt has reduced by #50.0m in the year to
#115.0m, (2005 - #165.0m).
The significant elements of the decrease in net debt over the year are outlined
below:
#m
Net debt at 27 February 2005 (165)
Cash flow from operating activities 70
Non-core disposals 28
Sale and leasebacks 28
Interest income 2
Capital expenditure (57)
Acquisition of units from the Nightclub Company (11)
Dividends (10)
Net debt at 2 March 2006 (115)
Cash and cash equivalents at the year end totalled #72.1m, (2005: #23.0m). The
Company intends to utilise this surplus to pay down its current borrowing
facility and fund the capital investment anticipated in 2006/7. Subsequent to
the year end the Company has repaid #30m of its drawings under its current
facility. The utilisation of this surplus, together with future inflows from
operations, is sufficient for the Company's present requirements.
Dividends and Capital Structure
The Board has proposed a 10% increase in the level of the final dividend, to
10.74p per share (2005: 9.76p). The increase in the level of the dividend
reflects the Company's confidence in the re-branding strategy whilst retaining
adequate funds for future capital investment and acknowledging the pressures the
business faces through the trading environment and period of significant
regulatory change. The future dividend policy will be tightened to provide a
dividend cover of two times.
Following the de-gearing of the Company over the last two years the Board has
decided to return capital to shareholders, mostly in the form of share buybacks,
a total of #70m over three years with the majority in the next eighteen months.
Following this programme of return of capital, net debt is anticipated to be
#150m to provide optimal leverage.
Management
During the year Nick Beighton has joined the Board as Finance Director from
Matalan plc, and David Crabtree joined the Company as Managing Director for the
Entertainment Division.
Keith Hamill's second three year term of office comes to an end in December and
he has indicated that he is not in a position, due to other interests, to be
available for a further term. In accordance with the provisions of the Combined
Code of Corporate Governance, the Nominations Committee led by the Senior
Independent Director David Longbottom will be responsible for recruiting a new
Chairman.
Since the year end the Company has re-organised its internal management
structure, to reflect the strategic objectives of the Company around a branded
estate.
Future Prospects
Our industry has been subject to several major regulatory influences that affect
the performance of our business.
The trading for the first ten weeks has been disappointing with total like for
like sales from the core businesses down 8%. The current performance includes
trading from the Easter period which was disappointing due to the timing of
Easter. Subsequent to Easter there has been an improving trend. Management do
not believe the first ten weeks to be indicative for the full year.
The Dancing segment is showing good top line growth, however the Entertainment
segment sales have further declined.
During the first ten weeks gross margins have been strengthened following the
result of management's operational effectiveness work. Admissions income,
although down on last year, has strengthened as a proportion of total income.
Whilst the total market remains challenging the actions the Company are taking
and the strategy followed by the Company will transform Luminar.
Consolidated Income Statement
for the year to 2 March 2006
Year ended 2 March 2006 Year ended 27 February 2005
Pre- Exceptional Pre- Exceptional
exceptional items exceptional items
items (note 3) Total items (note 3) Total
Note #m #m #m #m #m #m
Continuing
operations
Revenue 2 296.1 - 296.1 288.1 - 288.1
Cost of sales (52.1) - (52.1) (49.7) - (49.7)
Gross profit 244.0 - 244.0 238.4 - 238.4
Administrative (192.5) (0.7) (193.2) (186.6) (11.7) (198.3)
expenses
Profit / (loss)
from trading
operations 2 51.5 (0.7) 50.8 51.8 (11.7) 40.1
Exceptional items
relating to closure
of properties - (19.4) (19.4) - (2.5) (2.5)
Profit / (loss)
from operations 2 51.5 (20.1) 31.4 51.8 (14.2) 37.6
Interest receivable 2.6 - 2.6 1.1 - 1.1
Finance costs (11.1) - (11.1) (14.2) - (14.2)
Profit / (loss)
before taxation 43.0 (20.1) 22.9 38.7 (14.2) 24.5
Tax on profit / 4 (10.9) 6.9 (4.0) (10.5) 3.5 (7.0)
(loss)
Profit / (loss) for
the year from
continuing
operations
attributable to
equity shareholders 32.1 (13.2) 18.9 28.2 (10.7) 17.5
(Loss) / profit
from discontinued
operations * 2,6 0.9 (18.1) (17.2) 18.6 (34.5) (15.9)
Profit / (loss)
for the year
attributable to
equity shareholders 33.0 (31.3) 1.7 46.8 (45.2) 1.6
Earnings per share
from continuing
operations 7
Basic 25.8p 23.9p
Diluted 25.8p 23.9p
Earnings per share 7
from continuing and
discontinued
operations
Basic 2.3p 2.2p
Diluted 2.3p 2.2p
Dividends per share 5 14.20p 12.91p
* The (loss) / profit relating to discontinued operations is stated after tax.
Consolidated Statement of Changes in Shareholders' Equity
for the year to 2 March 2006
Share Share Capital Merger Equity Retained Total
Capital Premium Reserve Reserve Reserve Earnings
#m #m #m #m #m #m #m
Brought forward at 1 March 18.3 60.9 2.3 313.7 0.1 (0.8) 394.5
2004
Profit for the period - - - - - 1.6 1.6
Share based payment expense - - - - 0.2 - 0.2
Deferred taxation on share
based payments - - - - - 0.2 0.2
Amounts attributable to equity 18.3 60.9 2.3 313.7 0.3 1.0 396.5
shareholders
Dividends paid (note 5) - - - - - (9.5) (9.5)
Transfer from merger reserve - - - (33.5) - 33.5 -
Carried forward at 27 February
2005 18.3 60.9 2.3 280.2 0.3 25.0 387.0
Brought forward at 28 February 18.3 60.9 2.3 280.2 0.3 25.0 387.0
2005
Adjustment for implementation
of IAS 39 - - - - - (0.3) (0.3)
Restated brought forward at 28
February 2005 18.3 60.9 2.3 280.2 0.3 24.7 386.7
Profit for the period - - - - - 1.7 1.7
Share based payment expense - - - - 0.2 - 0.2
Amounts attributable to equity 18.3 60.9 2.3 280.2 0.5 26.4 388.6
shareholders
Dividends paid (note 5) - - - - - (10.3) (10.3)
Transfer from merger reserve - - - (39.1) - 39.1 -
Carried forward at 2
March 2006 18.3 60.9 2.3 241.1 0.5 55.2 378.3
Consolidated Balance Sheet
at 2 March 2006
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Non-current assets
Goodwill 177.5 203.1
Other intangible assets 2.1 1.1
Property, plant & equipment 383.1 413.5
Other non-current assets 7.4 7.6
570.1 625.3
Current assets
Inventories 2.6 3.0
Trade and other receivables 13.0 5.1
Cash and cash equivalents 71.9 22.6
87.5 30.7
Assets classified as held-for-sale 33.4 44.6
120.9 75.3
Current liabilities
Bank loans and overdraft - (0.9)
Trade and other payables (23.9) (38.5)
Current tax liabilities (30.2) (11.8)
Deferred income (0.6) (0.1)
Provisions (2.3) (0.6)
(57.0) (51.9)
Liabilities classified as held-for-sale (12.2) (8.8)
(69.2) (60.7)
Net current assets 51.7 14.6
Total assets less current liabilities 621.8 639.9
Non-current liabilities
Bank loans (179.2) (179.1)
Deferred income (9.3) (4.4)
Obligations under finance leases (5.6) (7.1)
Provisions (5.5) (3.2)
Deferred tax liabilities (43.9) (59.1)
(243.5) (252.9)
Net assets 378.3 387.0
Capital and reserves
Share capital 18.3 18.3
Share premium 60.9 60.9
Capital reserve 2.3 2.3
Merger reserve 241.1 280.2
Equity reserve 0.5 0.3
Retained earnings 55.2 25.0
Shareholders' equity 378.3 387.0
Consolidated Cash Flow Statement
for the year ended 2 March 2006
Year ended Year ended
2 March 2006 27 February 2005
Note #m #m
Cash flows from operating activities
Cash generated from operations 9 74.1 99.9
Tax received / (paid) 7.1 (6.8)
Debt issue costs paid - (0.9)
Interest paid (11.1) (14.3)
Cash flows from operating activities 70.1 77.9
Cash flows from investing activities
Purchase of property, plant and equipment (56.4) (49.9)
Purchase of intangible assets (0.8) (0.2)
Proceeds from sale of property, plant and 5.2 11.4
equipment
Proceeds from sale and leaseback of property,
plant and equipment 28.0 -
Acquisition of business (10.9) -
Proceeds received on disposal of business 24.5 -
Costs associated with disposal of business (2.0) -
Interest received 2.6 1.1
Cash flows from investing activities (9.8) (37.6)
Cash flows from financing activities
Repayment of long term borrowings - (24.6)
Repayment of short term loan note (0.9) -
Repayment of secured loan - (38.4)
Dividends paid (10.3) (9.5)
Cash flows from financing activities (11.2) (72.5)
Net increase / (decrease) in cash and cash 49.1 (32.2)
equivalents
Cash and cash equivalents at beginning of period * 23.0 55.2
Cash and cash equivalents at end of period * 72.1 23.0
* Cash and cash equivalents of #72.1m, (2005: #23.0m), includes cash and cash
equivalents of #0.2m, (2005: #0.4m), presented within assets classified as held
for sale.
Notes to the Financial Statements
1 Basis of Preparation
The preliminary announcement for the year ended 2 March 2006 has been prepared
in accordance with International Accounting Standards and International
Financial Reporting Standards, (collectively "IFRS"), as adopted by the European
Union at 2 March 2006. Details of the accounting policies adopted in this
preliminary announcement are set out within the investors section of the
Company's website, www.luminar.co.uk.
The annual financial information presented within the preliminary announcement
for the year ended 2 March 2006 is extracted from, and is consistent with, that
in the Company's consolidated financial statements for the year ended 2 March
2006, and those financial statements will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
Information in this preliminary announcement does not constitute statutory
accounts of the Company within the meaning of s240 of the Companies Act 1985.
Statutory accounts for the year ended 27 February 2005, which were prepared
under accounting practices generally accepted in the United Kingdom, have been
filed with the Registrar of Companies.
2 Segmental Information
The Company is principally engaged as the operator of night clubs, theme bars
and restaurants.
At the start of the year, the segmentation of the Company was changed to reflect
the future strategy of the business. Comparative income statement and cash flow
information has been reclassified at the balance sheet date to reflect the
composition of the segments as at these dates - segmental information therefore
reflects a consistent number of units within each segment for each period
presented.
For management purposes, the Company is currently organised into three main
business segments - Dancing, Entertainment and Non-Core operations. Non-core
operations includes units, both trading and closed, which do not align with the
Company's strategy of a high quality, predominantly branded and market led
business, together with sub-let sites.
Information about these business segments is presented below.
Notes to the Financial Statements
2 Segmental Information (continued)
For the year ended 2 March 2006
Dancing Entertainment Non-Core Head office and Consolidated
management
costs
#m #m #m #m #m
Total revenue 188.6 99.3 8.2 - 296.1
Operating profit /
(loss) before
exceptional items 54.7 19.3 (1.1) (21.4) 51.5
Exceptional items 9.7 (11.1) (12.9) (5.8) (20.1)
Segment result 64.4 8.2 (14.0) (27.2) 31.4
Net finance costs (8.5)
Profit before taxation 22.9
Tax on continuing (4.0)
operations
Profit from continuing
operations 18.9
Profit / (loss) from
discontinued operations
before exceptional
items 0.9 (0.5) 2.2 - 2.6
Exceptional items (0.3) (0.3) (24.9) - (25.5)
Profit / (loss) from
discontinued operations
before tax 0.6 (0.8) (22.7) - (22.9)
Tax on discontinued 5.7
operations
Loss from discontinued
operations (17.2)
Profit for the year 1.7
Head office and management costs comprise the head office and administrative
functions, area and divisional management costs, together with information
technology costs for the Company.
Notes to the Financial Statements
2 Segmental Information (continued)
For the year ended 27 February 2005
Dancing Entertainment Non-Core Head office and Consolidated
management costs
#m #m #m #m #m
Total revenue 171.7 102.3 14.1 - 288.1
Operating profit/
(loss) before
exceptional items 54.4 20.4 (2.2) (20.8) 51.8
Exceptional items (2.7) (1.2) (10.3) - (14.2)
Segment result 51.7 19.2 (12.5) (20.8) 37.6
Net finance costs (13.1)
Profit before taxation 24.5
Tax on continuing (7.0)
operations
Profit from continuing 17.5
operations
Profit from
discontinued operations
before exceptional 1.2 1.0 11.7 - 13.9
items
Exceptional items - - (39.3) - (39.3)
Profit / (loss) from
discontinued operations
before tax 1.2 1.0 (27.6) - (25.4)
Tax on discontinued
operations 9.5
Loss from discontinued
operations (15.9)
Profit for the year 1.6
Notes to the Financial Statements
3 Exceptional items
(a) Continuing operations
The Company incurred an exceptional charge on continuing operations as follows:
Year ended Year ended
2 March 27 February
2006 2005
#m #m
Exceptional items relating to trading units
Impairment of property, plant and equipment
- on trading units (0.3) (7.6)
- on units held for sale - (1.5)
Reversal of prior years impairment of property, plant and 9.5 -
equipment
Impairment of goodwill (15.7) (2.0)
Provision for onerous lease commitments - (0.6)
Reversal of provision for onerous lease commitments 0.6 -
Profit on sale and leaseback of property, plant and equipment 7.7 -
Costs relating to re-organisation and rationalisation (2.5) -
(0.7) (11.7)
Exceptional items relating to the closure of properties
Impairment of property, plant and equipment
- on closed units (8.1) (2.4)
- on head office property (3.1) -
Impairment of goodwill (3.3) -
Provision for onerous lease commitments (4.9) (0.1)
(19.4) (2.5)
(20.1) (14.2)
Tax on exceptional items 6.9 3.5
Exceptional items relating to continuing operations (13.2) (10.7)
The exceptional items recognised within continuing operations have been split
between those items relating to Company's exit from non-core operations and the
relocation of its head office and those associated with on-going trading of the
Group.
These units, although closed, were not actively marketed prior to the balance
sheet date. As a result these units do not meet the criteria to be classified as
held-for-sale, and therefore have been presented within continuing operations.
(i) Exceptional items relating to trading units
The reversal of prior years impairment charges of #9.5m, (2005 - #nil), has
arisen as the trigger causing the original impairment to be recognised has
reversed, ie, where it is now planned to re-brand a unit. The impairment of
property, plant and equipment on trading units of #0.3m, (2005 - #7.6m),
principally reflects the difference between the value in use of cash generating
units, (i.e., discrete trading units), and their carrying value.
The impairment of goodwill of #15.7m (2005 - #2.0m) has been recorded following
the annual impairment test required by IFRS 3, Business Combinations. The
impairment has been recognised against goodwill allocated to the Entertainment
and non-core segments, as a result of a decline in the performance of the
Entertainment division, specifically Jumpin Jaks units, and non-core units still
trading pending their ultimate disposal.
A reversal of previously recognised provisions for onerous lease commitments of
#0.6m (2005 - #nil), has been recognised from changes to the intended use of the
Company's units as a result of the re-branding strategy.
Notes to the Financial Statements (continued)
3 Exceptional charge (continued)
During the year the Company realised profits of #7.7m, (2005 #nil) on the sale
and leaseback of three sites (Hemel Hempstead, the Milton Keynes head office and
Bury St Edmunds), for a total consideration of #28.0m, received in cash.
Deferred income of #6.3m, relating to proceeds receivable above the fair value
of the properties disposed, has been recognised on the balance sheet and will be
amortised to the income statement over the life of the lease on a straight line
basis.
Costs of re-organisation and rationalisation of #2.5m, (2005 - #nil), have been
incurred in respect of the strategic review of the Entertainment division,
together with costs associated with the relocation and back-office
rationalisation of the Company's administration centres.
(ii) Exceptional items relating to the closure of properties
The impairment of property, plant and equipment of #11.2m (2005 - #2.4m), has
arisen from the closure of units in the non-core segment pending their ultimate
disposal resulting in a charge of #8.1m (2005 - #2.4m), and a charge of #3.1m,
(2005 - #nil) as a result of the re-measurement to the fair value less costs of
sale of the Group's former administration centres following the relocation of
the head office to Milton Keynes. Goodwill attributed to closed sites within the
non-core segment, #3.3m (2005 - #nil), has been impaired following the annual
impairment review required under IFRS 3.
The charges arising from onerous lease commitments of #4.9m (2005 - #0.1m) is to
recognise the obligation for rent and rates on currently vacant or closed units,
where the likelihood of assignment of the lease or sublet of the property is
unlikely in the short term. These units are closed or vacant following the
relocation of the Group's administration centres and the closure of non-core
sites not suitable for re-branding.
(b) Discontinued Operations
The Group incurred an exceptional charge relating to discontinued operations as
follows:
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Impairment on property, plant and equipment - on units held
for resale (12.7) (31.0)
Reversal of prior year impairment 2.5 -
Impairment of goodwill (14.7) (2.9)
(24.9) (33.9)
Other costs associated with disposals - (1.5)
Provision for onerous lease commitments (2.0) (3.1)
Reversal of provisions for onerous lease commitment 1.2 -
Realised loss on disposal of the Enterprise division (3.0) -
Realised profit / (loss) on disposals 3.2 (0.8)
(25.5) (39.3)
Tax on exceptional items 7.4 4.8
Exceptional items relating to discontinued operations (18.1) (34.5)
The impairment of property, plant and equipment of #12.7m, (2005: #31.0m), has
resulted from re-measuring to fair value less costs of sale those units
held-for-sale. The reversal of prior year impairment charges of #2.5m (2005:
#nil), has resulted from the upward re-
Notes to the Financial Statements (continued)
3 Exceptional charge (continued)
measurement of units held-for-sale to the extent of previously recognised
impairment charges.
The impairment of goodwill of #14.7m, (2005: #2.9m), has arisen following the
annual impairment test required under IFRS 3, Business Combinations, as a result
of re-measuring non-core units held-for-sale to their fair value less costs of
sale.
The provision for onerous lease commitments #2.0m (2005: #3.1m), relating to
sites presented within discontinued operations, has arisen from the closure of
sites following the decision to exit from non-core operations. The reversal of
previously recognised provisions of #1.2m, (2005 - #nil), has arisen as a result
of settlement of lease surrender premiums at a lower level than previously
provided for.
An exceptional loss on disposal of the Enterprise division, #3.0m, (2005 -
#nil), has been recognised on completion of the sale during the first half of
the 2005/6 financial year, (as outlined in note 6).
The profit on disposal of single sites of #3.2m, (2005: #0.8m loss), has arisen
on the disposal of 15 units for consideration of #10.0m, of which #5.2m has been
received in cash during the year, with receivables of #4.8m outstanding at the
year end.
4 Tax on profit for the year
(a) Analysis of charge in period
The taxation charge is based on the profit for the year and represents:
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Current tax
- Continuing operations
- Current period (11.2) (11.6)
- Adjustments from prior period 1.1 6.5
- Discontinued operations
- Current period (1.1) (3.1)
- Adjustments from prior period - 1.6
(11.2) (6.6)
Deferred tax
- Continuing operations 6.1 (1.9)
- Discontinued operations 6.8 11.0
12.9 9.1
Total taxation credit / (charge)
- Continuing operations (4.0) (7.0)
- Discontinued operations 5.7 9.5
1.7 2.5
Taxation relating to exceptional items is disclosed in note 3.
Notes to the Financial Statements (continued)
4 Tax on profit for the year (continued)
(b) Tax on items charged to equity
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Share-based payment - 0.2
Implementation of IAS 39, Financial Instruments: Recognition
and Measurement 0.2 -
0.2 0.2
5 Dividends
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Ordinary shares - final dividend paid for 2005: 9.76p per
share (final dividend paid for 2004: 8.87p per share) 7.1 6.5
Ordinary shares - interim dividend paid for 2006: 4.44p
per share (interim dividend paid for 2005: 4.04p per
share) 3.2 3.0
10.3 9.5
In addition, the Directors are proposing a final dividend in respect of the
current financial year of 10.74p per share, which will absorb an estimated #7.9m
of shareholders' equity. It will be paid on 20 July 2006. This dividend is
subject to approval at the Annual General Meeting, and has not been included as
a liability within these financial statements.
6 Discontinued operations and non-current assets held-for-sale
Comparative income statement and cash flow information is restated at each
balance sheet date to reflect the composition of discontinued operations as at
the latest balance sheet date.
(a) Results of discontinued operations
The results of the discontinued operations, which comprise the Enterprise
division and other non-core units, either disposed of or held-for-sale, forming
part of the Groups plan to exit from its non-core operations, included within
the consolidated income statement were as follows:
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Revenue 42.1 87.0
Expenses (39.4) (73.0)
Finance costs (0.1) (0.1)
Profit before tax 2.6 13.9
Attributable tax (expenses) / credits (1.7) 4.7
Profit after tax before exceptional items 0.9 18.6
Exceptional items:
Re-measurement to held-for-sale (24.9) (35.4)
Loss on disposal of the Enterprise division (3.0) -
Other exceptional items (see note 8b) 2.4 (3.9)
Attributable tax credits 7.4 4.8
Net loss attributable to discontinued operations (17.2) (15.9)
Notes to the Financial Statements (continued)
6 Discontinued operations and non-current assets held-for-sale
(continued)
On 10 June 2005, the Group completed the disposal of its wholly owned
subsidiary, Candu Entertainment Limited, which held 49 nightclubs forming the
major part of its Enterprise division. The net loss realised on the disposal
totalled #3.0m.
Consideration for the disposal totalled #26.8m, of which initial cash
consideration represented #22.6m, deferred contingent consideration recognised
on satisfaction of these contingencies represented #3.2m, with additional
deferred contingent consideration not yet accrued within the financial
statements totalling #1.0m. Cash disposed on the sale of the Enterprise division
totalled #0.3m.
Consolidated net assets disposed amounted to #27.2m, of which the material
amounts related to property, plant & equipment, with costs and asset write-downs
associated with the transaction above those charged in the year to 27 February
2005 totalling #1.6m.
(b) Cash flow from discontinued operations
The Consolidated Cash Flow Statement includes the following cash flows arising
from discontinued operations.
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Net cash flows from operating activities 4.3 17.3
Net cash flows from investing activities 25.8 6.5
Net cash flows from financing activities - -
30.1 23.8
(c) Assets and Liabilities of units held-for-sale
On 2 March 2006, 46 units were classified as held for sale, of which 43 units
were within the non-core segment, with 1 unit from each of the Dancing,
Entertainment and Head office and management segments. These units were being
actively marketed at the balance sheet date and a number of offers had been
received against the majority of these units, which formed the basis for the
estimates of fair value less costs of sale for these units. An external
valuation was used to estimate fair value less costs of sale in the absence of
receiving an offer from external parties.
A net charge of #24.9m, (2005: #35.4m), has been recognised on re-measurement of
units held for sale to fair value less costs of sale, which includes an upward
revaluation to fair value less costs of sale of #2.5m, to the extent of
previously recognised impairment losses.
All units are highly probable of being disposed of within 12 months from the
balance sheet date, apart from 4 units for which contracts have been
unconditionally exchanged before the year end but have an agreed completion date
of August 2007.
Notes to the Financial Statements (continued)
6 Discontinued operations and non-current Assets Held-for-Sale
(continued)
The major classes of assets and liabilities comprising the operations classified
as held for sale are as follows:
2 March 2006 27 February 2005
#m #m
Property, plant & equipment 30.5 38.7
Other non current assets - 3.6
Inventories 1.4 0.8
Trade and other receivables 1.3 1.1
Cash and cash equivalents 0.2 0.4
Total assets classified as held for sale 33.4 44.6
Trade and other payables (6.4) (7.0)
Finance lease obligations (1.5) -
Deferred income (0.6) (0.5)
Deferred tax - 1.5
Provisions (3.7) (2.8)
Total liabilities associated with units classified as held
for sale
(12.2) (8.8)
Net assets held for sale 21.2 35.8
During the year 13 units from those categorised as held for sale as at 27
February 2005 were moved out of held for sale, following a decision to re-brand
these units. Previously recognised impairment charges of property, plant and
equipment of #3.2m were reversed through continuing exceptional items following
the reclassification of these units out of held for sale.
7 Earnings per share
The calculation of the basic earnings per share (EPS) is calculated by dividing
the earnings attributed to ordinary shareholders by the weighted average number
of shares in issue during the year. For diluted earnings per share the weighted
average number of ordinary shares in issue is adjusted to assume conversion of
all dilutive potential ordinary shares. The Company has two classes of dilutive
potential ordinary shares: share options granted to Directors and employees
where the exercise price is less than the average market price of the Company's
ordinary shares during the year, and the contingently issuable shares under the
Company's long-term incentive plan, (i.e. the Deferred Bonus Plan). At the year
end the performance criteria for the vesting of awards under the long-term
incentive plan had not been met and consequently these potential shares are
excluded from the diluted EPS calculation.
An alternative measure of earnings per share from continuing operations
pre-exceptional items has been included below as the Directors' believe that
this measure of earnings per share is more reflective of the on-going trading of
the Company.
Reconciliation of the earnings and weighted average number of shares used in the
calculations are set out below.
Notes to the Financial Statements (continued)
7 Earnings per share (continued)
Year ended 2 March 2006
Weighted
average number
of shares (in
millions)
Per share amount
Earnings (pence)
#m
Basic EPS
Earnings attributable to ordinary 1.7 73.2 2.3p
shareholders
Effect of dilutive securities - options - 0.1 -
Diluted EPS 1.7 73.3 2.3p
Basic EPS from continuing operations 18.9 73.2 25.8p
Diluted EPS from continuing operations 18.9 73.3 25.8p
Basic EPS from discontinued operations (17.2) 73.2 (23.5)p
Diluted EPS from discontinued operations (17.2) 73.3 (23.5)p
EPS from continuing operations
pre-exceptional items
Basic EPS from continuing operations
pre-exceptional items 32.1 73.2 43.9p
Diluted EPS from continuing operations
pre-exceptional items 32.1 73.3 43.8p
Year ended 27 February 2005
Weighted
average
number of
shares Per share
Earnings (in millions) amount
#m (pence)
Basic EPS
Earnings attributable to ordinary 1.6 73.2 2.2p
shareholders
Effect of dilutive securities - options - 0.1 -
Diluted EPS 1.6 73.3 2.2p
Basic EPS from continuing operations 17.5 73.2 23.9p
Diluted EPS from continuing operations 17.5 73.3 23.9p
Basic EPS from discontinued operations (15.9) 73.2 (21.7)p
Diluted EPS from discontinued operations (15.9) 73.3 (21.7)p
EPS from continuing operations
pre-exceptional items
Basic EPS from continuing operations
pre-exceptional items 28.2 73.2 38.5p
Diluted EPS from continuing operations
pre-exceptional items 28.2 73.3 38.5p
All amounts included within the column headed 'Earnings' are taken from the face
of the Consolidated Income Statement.
Notes to the Financial Statements (continued)
8 Acquisition of business
On 18 November 2005 the Group acquired the assets and trade relating to 13
units, of which 10 are large capacity clubs, from the Nightclub Company (UK)
Ltd, for a total cash consideration of #11.0m. The assets acquired in the
business combination are outlined below:
Book Value Adjustment Fair value
#m #m #m
Non-Current Assets
- Property, plant & equipment 1.3 - 1.3
- Intangible assets - 0.3 0.3
Current Assets
- Inventory 0.3 0.4 0.7
- Prepayments 0.5 - 0.5
- Cash 0.1 - 0.1
2.2 0.7 2.9
Goodwill 8.1
Consideration 11.0
Cash paid 11.0
The adjustments to the net book value of assets relate to the recognition of
acquired intangible assets at their fair value and the step-up of inventory to
its fair value less costs of disposal. The remaining goodwill of #8.1m relates
to the development potential on the future re-branding of the acquired units.
The acquired units contributed #5.8m to revenue and #0.7m to operating profit
before exceptional items since acquisition. These units have been allocated to
the Dancing segment.
Net cash paid on acquisition of business of #10.9m on the face of the
Consolidated Cash Flow Statement is net of #0.1m cash acquired with the
business.
Notes to the Financial Statements (continued)
9 Cash flow from operating activities
a) Reconciliation of net cash inflow from operations
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Profit before taxation - continuing operations 22.9 24.5
Loss before taxation - discontinued operations (22.9) (25.4)
Profit / (loss) before taxation - (0.9)
Depreciation and amortisation 32.9 33.4
Net impairment of property, plant and equipment 12.2 42.5
Impairment of goodwill 33.7 4.9
(Profit) / loss on sale of property, plant & (3.2) 0.8
equipment
Profit on sale and leaseback (7.7) -
Loss on disposal of subsidiary undertakings 3.0 -
Interest income and financing costs 8.6 13.2
79.5 93.9
(Increase) / decrease in inventories (0.1) 0.1
(Increase) / decrease in receivables (3.3) 2.2
(Decrease) / increase in trade and other payables (0.5) 0.5
Increase in provisions 4.8 3.2
Net cash inflow from operations before 80.4 99.9
exceptional cash flow items
Outflow relating to exceptional cash items (6.3) -
Net cash inflow from operations 74.1 99.9
Cash outflow relating to exceptional items relate to re-organisation and
rationalisation costs of #2.3m, and a payment of VAT following assessment by HM
Revenue and Customs of #4.0m, against which the Group is currently in the
process of appealing.
b) Net debt
The movement in net debt in the year is analysed as follows:
Year ended Year ended
2 March 2006 27 February 2005
#m #m
(Increase) / decrease in cash in the year (49.1) 32.2
Non-cash changes - increase in finance lease - 5.3
liabilities
Cash outflow from repayment of finance (0.9) (63.0)
Movement in net debt in the year (50.0) (25.5)
Opening net debt 165.0 190.5
Closing net debt 115.0 165.0
27 February 2005 Cash Flow 2 March 2006
#m #m #m
Cash and cash equivalents * 23.0 49.1 72.1
Loans due in less than 1 year (0.9) 0.9 -
Loans due in more than 1 year (180.0) - (180.0)
(157.9) 50.0 (107.9)
Finance leases * (7.1) - (7.1)
Net debt (165.0) 50.0 (115.0)
* includes cash and cash equivalents and finance leases relating to units held
for sale
Notes to the Financial Statements (continued)
9 Cash flow from operating activities
(c) Cash Flows from Continuing Operations
To assist in the understanding of cash flows relating to the on-going business
of the Company, the following tables outline the cash flows relating to
discontinued operations and exceptional items to be excluded in order to present
operating cash flows that relate to the Company's continuing business:
Year ended Year ended
2 March 2006 27 February 2005
#m #m
Cash flows from operating activities 70.1 77.9
Less: cash flows relating to operating activities - discontinued
operations (4.3) (17.3)
Add: outflows relating to exceptional cash items 6.3 -
Cash flows from operating activities before exceptional cash
flows - continuing operations 72.1 60.6
Year to Year to
2 March 2006 27 February 2005
#m #m
Cash flows from operations before exceptional cash flows 80.4 99.9
Less: cash flows relating to operations - discontinued (4.3) (17.3)
operations
Cash flows from operations before exceptional cash flows -
continuing operations 76.1 82.6
This information is provided by RNS
The company news service from the London Stock Exchange
END
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